SteelOrbis Shanghai
Influenced by the brisk commercial activity and the sharp drop in inventory at ports,
iron ore prices in
China's major ports saw an overall rise during the past week. In addition, the domestic ore market showed stable movement with a slight increase in some local markets.
On November 23, the price of 66-percent damp base
iron ore in Tangshan was up RMB 10/mt ($1.3) compared with November 16 to RMB 570/mt ($72.6) excluding 13 percent VAT, while its price in Beipiao city of Liaoning Province was at RMB 460/mt ($58.6) excluding VAT. The price quotation of 63.5-percent
India fine ore was up RMB 5/mt ($0.6) to RMB 645/mt ($82.2) at Tianjin Port, while the price at Qingdao Port was at RMB 635/mt ($80.9). The price of Australian Hamersley 62- and 63-percent fine ore at Beilun Port increased RMB 10/mt ($1.3) to RMB 640/mt ($81.5).
Since the total costs of domestic ore already exceed those of imported ore after the continuous increase in the domestic ore market, the mills are mainly interested in making purchases of imported ore at the ports. The result has been brisk commercial activity, especially for low grade ore.
Chinese
iron ore imports saw a considerable decrease in October, while in November they did not pick up by a big margin. Rapid
consumption of already-imported ore and a sharp slide in inventory have thus been seen. According to the statistics, by the end of week 46, the total inventory of
iron ore at
China's twenty-three major ports amounted to 37.34 million mt, down 1.9 million mt week on week.
Meanwhile, prices of domestic ore still remained at a high level.
Influenced by the above factors, imported ore prices climbed up throughout the past week, with remarkable growth in low grade ore. Since the
iron ore import situation will continue for the rest of the current month, the inventory will not be replenished in sufficient manner. Therefore, the imported ore prices are likely to rise for the next week.
As regards domestic ore, the market continued its steady movement. However, due to the high price level, mills reduced their purchase quantities of domestic ore.
In the northeastern region,
iron ore production dropped because of the bad weather. Thus, with a low inventory, there is no pressure on prices. Nevertheless, the mills in other regions reduced their purchases after the hike of
freight charges. This is another potential threat which may cause ore prices in the region to drop.
The market in Hebei is also quite stable. Most of the local mills preferred imported to domestic one, leading to a reduction in the
trading volume of domestic ore. However, the mines did not lower their prices, preferring to just wait and see.
Generally speaking, the above situation won't change by the end of November. Therefore, the
iron ore market will move steadily up. However, entering into December the demand for
iron ore will decline because the winter stock-building of the steel mills has almost been completed. For this reason, prices are likely to go down.